Nintendo CEO Satoru Iwata has told TIME magazine that most Nintendo “smart device” games will be developed in-house, rather than by partner DeNA. The company announced on Tuesday that it would finally start making games for smartphones and tablets.

Development of smart device games will be mainly done by Nintendo […] DeNA has extensive know-how in developing the “service” side of things, and will be primarily responsible for the service-oriented operations. We will be able to greatly leverage strengths of each party.

Iwata also confirmed Jeremy’s view that we’re unlikely to see classic Nintendo games like Mario, Donkey Kong and Zelda come to iOS and Android devices in their original forms … expand full story

The graphic above shows U.S. revenue for Flurry’s portable gaming category- a category that now includes Nintendo DS, Sony PSP, iOS, and Android. As you can see, iOS and Android have together taken the lead from Nintendo with 58% of revenues in comparison to last year’s 34%. In comparison, Nintendo DS held 57% during 2010, while dropping to just 36% in 2011. Total US revenue jumped from $2.7 billion in 2009 to $3.3 billion in 2011.

When comparing combined game revenues of the two veterans– Sony and Nintendo– with the combined revenues of the two new guys– Apple and Google– 2011 will be the first year where the emerging platforms dominate with iOS and Android estimated to take in $1.9 billion in comparison to the DS and PSP’s $1.4 billion. That accounts for a $200 million drop for Sony and Nintendo and $1.1 billion increase for iOS and Android from 2010. Perhaps investors were right to urge Nintendo to begin developing iOS titles.

As for Nintendo, the company who captured approximately two-thirds of the market in 2009 has seen their “enemy of the future” demote them to just a third of the market. Sony clearly has some catching up to do, but is hard at work on highly anticipated new handheld devices for 2012.
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Will Nintendo begin to produce titles for iOS devices? It’s a possibility if they take the advice of Tokyo-based Stats Investment Management Co, “Nintendo should try to either buy its way into this platform (smartphones) or develop something totally new.”

“The rift highlights the dilemma President Satoru Iwata faces as consumers shun Nintendo devices to play games on iPhones, iPads and Facebook Inc.’s website. The flop of the 3DS debut prompted the company to cut prices 40 percent in Japan and 32 percent in the U.S., the first time the games developer has resorted to such a move within six months of a product’s debut.”

Historically Nintendo has made their stance clear on developing for platforms other than their own. President Satoru Iwata even went as far as saying the company would never develop for other platforms as long as he’s in charge. While their new 3DS handheld hasn’t received a great reception, investments Nintendo has made recently in the 3DS (competitor to Sony’s Vita) portable device and Wii U makes it unlikely they will divert their attention to developing games for Apple devices anytime soon. This is especially true when talking about hallmark franchises like Mario and Donkey Kong. To provide these titles to iOS users would kill any incentive the company has to offer potential 3DS and Wii U customers.

That being said, the market opportunity is huge (just look how well Nintendo emulators do on jailbroken devices). If the game-maker continues to lay eggs with its portable products, it might be forced to join up with Apple, or build a 3DS Android phone like Sony did with its Xperia Play.